Drop in monthly revenue seen by Formosa Plastics Group’s four core companies

05-Jun-12

Four core companies of Formosa Plastics Group have reported losses in monthly revenue. Formosa Petrochemical Corp has reported the largest drop in monthly revenue among the Group’s four core companies of 22.8% to NT$66.496 bln (US$2.21 bln) from April 2012, as per TaipeiTimes. This can be attributed to recent declines in global crude oil and ethylene prices, which have affected sales of its petrochemical products amid deteriorating petrochemical demand from China. Formosa Petrochemical president opines that consumption in China is slumping. While bank credit may be readily available in China, 40% of processing plants there are barely breaking even and 30% are in the red, while many companies are not borrowing because of fears they will not be able to repay the loans. Worries abound that China has not yet bottomed out as manufacturers continue to reduce their inventories. The crisis this time is a demand crisis, unlike 2008, when it was a financial crisis. The group’s flagship company Formosa Plastics Corp, saw last month’s sales fall 6.7% month-on-month to NT$14.04 bln and 16.4% year-on-year. Aromatics and styrenics producer Formosa Chemicals and Fibre Corp reported a 4.9% revenue drop to NT$25.05 bln from the previous month, but an increase of 3.6% from a year earlier. Nan Ya Plastics Corp, the nation’s largest plastics maker, reported a sequential sales decline of 6.8% to NT$14.07 bln last month, a drop of 14.2% from one year ago. Overall, the group’s four core companies posted combined revenue of NT$119.66 bln last month, down 16.1% month-on-month. Revenues in the first five months of the year reached NT$666.96 billion, down 3% from a year earlier.